BORROWERS Mortgage Commentary 04 / 2016
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Issue 2016 /4         24 March 2016

Welcome to the fourth fortnightly General Finance Mortgage Commentary for 2016.  We aim to keep you informed on developments at General Finance Home Loans and the mortgage market in general. 

The Money Market
This morning (2pm on 24 March 2016) the money markets were at the following levels: 
Official cash rate    2.25% (unchanged)
90 day bill rate       2.33 (up from 2.30)
1 year swap rate    2.23 (down from 2.26)
3 year swap rate    2.32 (up from 2.30)
10 year bond rate   3.08 (up from 2.93)
NZ/US dollar      0.6697 (up from 0.6657)

Getting Your Rent Paid
Landlords have always had a problem in trying to chase up former tenants who owe money, for such things as rental arrears and for property damage.  In 2014 there was a law change that made it easier for landlords to collect such things as unpaid rent. Courts can now issue an attachment order requiring an employer to deduct an employee’s unpaid rent from their wages or salary, without the need to go to a tenancy tribunal hearing.   Similar orders can be issued, requiring Work and Income to deduct a beneficiary’s unpaid rent out of their benefit. It is however more difficult if someone is self employed. This mechanism will be of assistance to landlords in recovering unpaid rent.

New Homes Only
When will our Government follow Australia, Singapore and Hong Kong in allowing non-residents to only purchase brand new dwellings? This has been talked about, but the Government has failed to act. This is a sound idea.  It encourages the building of new dwellings. These are urgently required. It would also remove some of the price pressure from the second hand dwellings market, as only New Zealand residents could participate in that market.  It would also encourage the demolition of older dwellings, that are well past their used-by-date, enabling their replacement with one, two or three modern medium density new dwellings.

Mortgage Rates Across the Tasman
The official cash rate in Australia is currently sitting at 2.00% and ours is now at 2.25%.   You would expect mortgage rates to be at similar levels across both sides of the Tasman.  They are, except in the floating rate area.  In this country floating mortgage rates are around 5.55% to 5.75%, but across the Tasman they range from 4.75% - 5.00%. That the Australians are better than us, indicates that the banks here are still taking some extra margin in the floating rate area.  On the fixed side we are much the same. One year fixed is around 4.69% in Australia and 4.50% here. The three year fixed rate is around 4.65% here and the same across the ditch.

Asset Lends
We are still doing asset lends on business related proposals.  Typically, they are for borrowers looking at purchasing a business or a franchise, where there is little immediate income but with a future expectation of some.  This is sound lending for us. In these cases we are prepared to consider both first and second mortgages.

Mortgage Interest Rates
For updated mortgage interest rates, either for new business or applicable to your existing loan, please contact your Lender (below) or the General Finance Limited Loan Administration Department.

As everyone's personal circumstances are different and the tax treatment of their affairs is always determined by their own circumstances, you should not act on any comments made in our Commentary without obtaining your own independent professional advice.

General Finance Limited is a Registered Financial Services Provider, with registration number  FSP8882.